New Delhi: The stagnant demand scenario of the Indian steel sector is likely to come to an end with the new government putting thrust on areas like manufacturing and infrastructure, C.S. Verma, chairman, Steel Authority of India Ltd (SAIL), said on Tuesday.
Addressing shareholders at the company’s annual general meeting (AGM), Verma said: “We witnessed another year of sub 5% GDP (gross domestic product) growth in fiscal 2013-14. However, a new era of hope, change and confidence has dawned on the country.”
The signs of change to come were already reflected in the general budget presented by the new government with announcement of initiatives such as opening up of more sectors for foreign direct investment, plans to accelerate growth in manufacturing and facilitating investments.
Besides, the government has its focus on infrastructure like development of smart cities, ports, power plants, a plan for doubling the pipeline grid, metro for tier-II cities, industrial corridors, incentives for housing and revival of special economic zones.
“These initiatives augur very well for the Indian steel industry, and we are confident that good growth would be witnessed in domestic steel consumption in the coming years, bringing an end to the stagnant demand scenario,” Verma said.
India’s steel consumption grew by just 0.6% last fiscal, its lowest in four years, to 73.93 million tonnes (mt), mainly impacted by a slower expansion of domestic economy.
This was due to subdued demand from two major consuming sectors—construction and automobile. The construction sector accounts for around 60% of the country’s total steel demand and the automobile industry consumes 15%. Both the sectors were plagued by slowdown in the economy.
“Notwithstanding the challenging market conditions, your company achieved a total sales volume of 12.09mt during FY’14, registering a growth of 8.6% over the previous year,” Verma said.
On ongoing expansion and modernisation which would take SAIL’s hot metal capacity to 23.4 million tonnes per annum (mtpa), he said orders worth ₹ 62,778 crore have been placed and a capital expenditure of ₹ 55,444 crore has been made till last month. Facilities of about ₹ 26,000 crore have been operationalised.
Verma said SAIL has already made its Vision 2025 ready to increase the company’s capacity to 50mtpa.
